Operations

Medium-Duty Orders Fall 1.1% in 2016

Orders of classes 5 to 7 vehicles declined 1.1% in 2016 after a strong December finish and have outpaced heavy-duty truck orders in part due to pent-up demand from government fleet purchasers, according to ACT Research.

In 2016, customers ordered 228,500 units, which was a "virtual carbon copy" of 2015, said Kenny Vieth, ACT's president and senior analyst. December marked the second strongest month of the year and an eight-month high-water mark with 20,600 orders. The month is historically the second strongest order month of the year.

Meanwhile, classes 8 truck orders declined 24% to 21,400 in December but the month broke a string of year-over-year monthly declines that reached 22 months.

"From our perspective, demand in the medium-duty space is always less volatile than in the heavy-duty space," said Steve Tam, ACT's vice president. "The medium-duty fleet was still satisfying pent-up demand in 2016, particularly in the government/municipal segment, as their revenue stream and subsequent spending activity lags that of the broader economy."

Demand for medium-duty trucks has also been driven by a strong construction and housing industry.

"Housing activity (permits, starts, and sales) along with new light auto and truck production are two excellent economic indicators for the medium-duty commercial vehicle market," Tam said. "While they tend to be more concurrent in nature, similar growth stories substantiate 2016s performance and portend more of the same in 2017."